Student power forces HSBC U-turn on overdrafts

The bank has gone back on plans to end interest-free deals for graduates after a co-ordinated protest on the social networking site Facebook.

The "Stop the Great HSBC Graduate Rip-Off" campaign began last month but there has been a rush in recent days. More than 5,000 students and graduates have now signed up online.

Some posts had been calling for a boycott of the bank after it said it would stop offering interest-free overdrafts to new graduates. Under HSBC's plans, they would have been charged 9.9 per cent.

The National Union of Students (NUS), which has been co-ordinating the campaign, said many students had joined HSBC thinking they could take advantage of a free overdraft to tide them over between leaving university and starting work.

At first, the bank insisted its decision was a response to increasing levels of bad debt and misuse of accounts by graduates.

But in response to the growing protest, it has suspended the plan.

"Following the feedback from our graduate account holders, we have taken the decision to freeze interest charging on 2007 graduate overdrafts up to £1,500 and refund any interest charged in August," the bank said.

It added that it would be meeting the NUS to draw up a new arrangement for student account holders.

Forgiveness, though, was in short supply among campaign members. One entry read: "My trust has been shattered... and I will never engage in another transaction with them."